ALTERNATIVES We had come out two alternatives in order to help Sindy solve the dilemma she faced. The first alternative is expanding her business into middle and senior level segment after 2 years. By expanding the business, Sindy will able to get more profit. This is because the revenue that she will get from senior staff positions is higher compare to junior staff positions. The second alternative that we suggest is doing nothing. Doing nothing means that Sindy have to continue on what she do now and just focusing on the blue collar and junior staff positions.
Alternative 1: Expand the business into middle and senior level segment after 2 years. Since on the first year of operation, Sindy are able to get an amazing profit as well as recovered all her investment in the business, there will be no problem for her to expand her business widely after two years. The reason we want Sindy to expand her business after 2 years, not after 1 year is because we want Sindy to gain more business knowledge and on the same time, save some money so that she will able to hire more sales people, HR professional and pay for leasehold improvement. In two years before expanding her business, it is important for Sindy to learn more on the recruiting agency business since she have to face a very competitive environment once she enters the middle and senior level segment. She will have to compete with various competitors which some of them may be a big company and have more experience in doing the business. Therefore, 2 years is the best time for Sindy to get all of these which is gain her knowledge and save some money. Another reason we suggest Sindy to expand her business into middle and senior level segment is demand for skilled workers at China increase in the year of 1998 and it may continually increasing. Demand for skilled workers is increase due to globalization and technology development on that time. Wu (2001) prove in his theoretical model that the skilled workers in China increases as China opens up its market more and attracts foreign direct investment more into high-tech sectors. China was less affected by the inflation happened in the 1990’s. This encourages the foreign company to open up their business in China as well as doing investment and trade. Since many foreign companies open up the business in China, demand for skilled workers is highly needed. Furthermore, technology development also increases the demand of skilled people since their idea is needed in order to ensure that the technology had always been updated, improved, and developed.
Besides that, Sindy can expand the business into higher-level segment because the wages for senior staff is higher compare to junior staff. China has experienced rising wage inequality due to rising relative demand for skilled labour. Bin Xu and Wei Li (2008) stated that there are two reasons that cause the rising of wage inequality in industrial countries. The first one is skill-biased technical progress that increases the demand for skilled workers relative to unskilled workers. For example, adoption of computer technology in the workplace accounts for 20–35 percent of the increase in relative demand for skilled workers. The second cause is globalization defined as increasing international trade and investment. In the Heckscher–Ohlin trade model and the Feenstra–Hanson (1996) outsourcing model, openness in trade and investment is shown to make industrial countries more specialized in skill-intensive production and hence raise the relative demand for skilled labour. These statements show a bad news for some workers in China or government itself. However, it may be a great opportunity for Sindy because the success fee of Easy Business is depends on the wages of applicants, not only on the number of applicants. If the salary of applicants is high, the success fee can also be high thus leads to high profit for Easy Business. Therefore, it is a great advantage for Sindy to take this oppurtunities.
Alternative 2: Do nothing In order for Sindy not to take any risk when expanding the business, it is the best for her to stay on the current business plan, which is focusing on blue collar and junior staff positions rather than at managerial level. Sindy can change her thinking from doing nothing to doing something, but not after two years. This means that, after two years, she has to maintain on what she does now and can change it only after 5 years for example. This is because to help Sindy gain more knowledge in recruiting agency as well as gain more money. She also will be able to gain lots of experience in doing this business. This can be an advantage for her once she starts expands her business after 5 years because has lots of experience in recruiting agency. Besides that, Sindy also can gain loyalty from clients on hiring company since she is focusing in just one segment. The positions is same, therefore the clients from hiring company sometimes may also be the same. If she continuously works with the same client, the probability for loyalty from clients will be high. Clients will be loyal if they are comfortable with the services provided. Once hiring companies feel comfortable with Easy Business, they may recommend it to others. This is an advantage to Sindy since she can get more clients through this.
Other than that, Sindy also do not have to compete with others since the competition for blue collar positions is low compare to white collar. This can reduce the level of stress for Sindy in doing the business. She also does not have to think hardly the plan to compete the rivalry.
Finally yet importantly, Sindy can save cost from hiring HR professional. The salary for HR professional is high. By this, Sindy can save more money before really hiring HR professional after 5 years.
Both of these alternatives have its pros and cons. For example, Sindy may end up get higher profit if she expands the business. However, there will be some risk that she has to face. Meanwhile, if she does nothing, there will be less risk that she has to face, but the profit may not be high compare to expand the business. Next part will be discussed further on the analysis of these two alternatives.

FINANCIAL ANALYSIS At first, financial analysis is focusing on the income for alternative number one, which is expanding the business into middle and senior level segment. From this, we try to figure out the best and worst case if we expand the business. Exhibit 1 shows us on that. In doing the financial analysis for this, there are several assumptions and decisions that we made. Below is the summary for that based on the best-case scenario including the reasons. No | Assumptions / Decisions | Reasons | 1 | No. of positions advertised per week increased by 5 | Sindy is focus in blue collar and white-collar segment, so there will have many positions that she needs to advertise. | 2 | No. of applicants is increase by 5 | Increase in the number of positions leads to increasing the number of applicants. | 3 | Registration fee increase by 5 | It has increase because she is now focusing in two level segments. In order to back up the high expenses and works that they do, Sindy has to increase the registration fee by RMB 15. | 4 | Average salaries per month is RMB 3100 | Based on China Daily, November 5, the average salary for skilled worker in Shanghai is RMB 5,280 (708 dollars). If added with unskilled worker, the average salary may be RMB 3,140 per month. [(RMB 5,280 + RMB 1000) / 2] However, we just assume it is RMB3100. | 5 | Add for leasehold improvement for RMB 500 each month. | Sindy is focusing in higher segment. Therefore, it is important for her to maintain her reputation. She just has to spend RMB 500 because we do not want her to take risk in expanding more on leasehold improvement. | 6 | Other operating expenses rise twice | There will be many works to do which can lead to increase in cost. Therefore, we assumed that the cost would increase double. | 7 | Provide HR professional and his/her salary is RMB 7,000 per month | It is half of the salary as stated in the previous case. We want to reduce cost, so we do not follow the salary of RMB 10,000 as stated in the previous case. | 8 | Chan payment change to RMB 1000 per month plus 15% on his success fee | Give basic salary to Chan for her guarantee income as well as motivate her to work hard. She just has to focus on the foreign invested enterprise because her work as interviewer is changed to HR professional’s work. | 9 | Hong basic salary is increase by RMB 100 | He is changed to work on foreign invested enterprises; therefore, in order to motivate him in doing her work we increase his base salary by RMB 100. | 10 | Provide RMB 500 for Ren as his base salary | Give basic salary to Ren for his guarantee income as well as motivate him to work hard. | 11 | RMB 500, 15% of success fee for new employee | Hired new employees because current employee will not be enough to manage the work if the business is expanded. | 12 | Receptionist salary increased by RMB 100 | To avoid turnover from her as well motivate her to work in Easy Business. | 13 | Advertisement is increase by RMB 12,000 | We are suggesting Sindy to attend the job fairs every month in order to attract more clients. |
There are several assumptions and decisions that we did also in doing worst-case analysis. Below shows the details of it: No | Assumptions / Decisions | Reasons | 1 | Registration fee is maintained even focusing in higher level segment | To attract more people register to the applications | 2 | Advertisement is increase by RMB 6,000 | We are suggesting Sindy to attend the job fairs every two month in order to reduce costs. | 3 | There is no base salary for Ren and new employer. It is 100% commission given to them. | In order to motivate workers work harder since their income is depends on it. Furthermore, we want to reduce cost since this way can keep payroll costs down. | 4 | RMB 10,000 per month is given for the salary of HR professional | To attract more excellent HR professional works in EB. By this, he/she is able to attract more client as well as increase revenue for the company |

Exhibit 2 will shows the staffing costs for alternative number 1 and number 2. This staffing cost is the details of salaries that included in exhibit 1.
From best and worst case scenario, we can concluded that it is the best for Sindy to increase the registration fee to RMB15 as well as increasing the number of positions advertise. Since Sindy is not only focusing on blue collar, so, it is appropriate for her to charge more. Besides that, attending a job affair may help Easy Business to be known by the world. From this, the potential for Sindy to get clients will be high. Therefore increase the advertisement cost by attending a job fair can give a better income for her. Focusing to white-collar segment need a HR professional to manage on it. The salaries have to be increased because of this. Other than thatm, we are also encouraging Sindy to give basic payment plus commission to her staff. This is because, through base salary, the staff can get guarantee income while through commission, can motivate staff to work harder since their income is depending on that. By following best-case scenario, the profit that Sindy may get will be little bit high compare to worst-case scenario. After finishing this, we will compare the financial statement for both alternatives that is expand the business or doing nothing. Exhibit 3 shows the comparison of it. Based on exhibit 3, we can see that Easy Business will get more profit when it expands into middle and senior level segment after two years. The different of the profit between alternative number one and alternative number two is quite high which amounting RMB97, 757. Looking at this amount can motivate Sindy to expand the business.
Finally yet importantly, exhibit four shows fixed asset investment and the years needed to recover on fixed asset. The data shows that it takes one and half months for Easy Business to recover the investment for the furniture and leasehold improvement.
Financial analysis shows there will be lots of profit that Sindy will get if she expand the business into middle and senior level management.
Exhibit 1 | Best Case (RMB) | Worst Case (RMB) | Registration fee | 312,000(20 positions * 20 applicants * RMB15 * 52 week) | 208,000(20 positions * 20 applicants * RMB10 * 52 week) | (+)Success fee | 372,000(20 positions * 20 applicants * RMB3, 100
* 30%) | 372,000(20 positions * 20 applicants * RMB3, 100 * 30%) | (=)Gross Profit | 684,000 | 580,000 | Rental | (48,000) (RMB100 * 40Sq.M *12monts) | (48,000)(RMB100 * 40Sq.M * 12months) | Advertising | (38,000) (RMB26,000 + RMB 12, 000) | (32,000) (RMB26,000 + RMB 6, 000) | Other operating cost | (42,000) (RMB 21,000 * 2) | (42,000) (RMB 21,000 * 2) | SalariesBase salaries | (133,200) (RMB10,800 + RMB38,400 + RMB84,000) | (157,200) RMB10,800 + (RMB1,100 x 12months)2 + (RMB10,000 x 12months) | Commission | (55,800) (372,000 * 15%) | (55,800) (372,000 *15%) | ( - ) Operating cost except. dept | (317,000) | (335,000) | (=) Operating income | 367,000 | 245,000 | ( - ) Income tax (30%) | (110,100)(30% * 367,000) | (73,500)(30% * 245,000) | Net Income | 256,900 | 171,500 |

Exhibit 2 Staffing Cost: | Alternative 1 | Alternative 2 | Receptionist | 10,800(RMB900 x 12months) | 9,600(800*12) | Sales:Base Salaries | 38,400(RMB1100*12months)2 + (RMB500*12months)2 | 12,000 | Commission | 55,800(0.15*372,000) | 53,430 | HR Professional | 84,000(7000*12) | 0 | Total | 189,000 | 75,030 |

Exhibit 3 | Alternative 1 (RMB) | Alternative 2 (RMB) | Operating Cost: | | | Office Rental | 48,000 | 48,000 | Salaries | 133,200 | 19,800 | Commissions | 55,800 | 53,430 | Advertising | 38,000(RMB26000 + RMB1000 * 12months) | 26,000 | Other Operating Costs | 42,000(RMB 21000 * 2) | 21,000 | Total | 317,000 | 168,230 | | | | | Alternative 1 (RMB) | Alternative 2 (RMB) | Revenue Per position: | | | Registration Fee Per Position | 300(RMB15*20applicants) | 160 | Success Fee Per Position | 930(RMB3100 * 30%) | 300 | Total | 1,230 | 460 | | | | No. of Positions Advertised / Week | 20 | 15 | | | | Net Income: | Alternative 1 (RMB) | Alternative 2 (RMB) | Annual Revenue | 684,000 | 395,577 (Assume 5% increase each year) | Operating Cost Ex. Depreciation | (317,000) | (168,230) | Operating Income | 367,000 | 227,347 | Income Tax (30%) | (110,100) | (68,204) | Net Income | 256,900 | 159,143 |

Exhibit 4 | Alternative 1 (RMB) | Furniture & Equipment: | | Furniture | 20,000 | Leasehold Improvement | 6,000 (RMB500 * 12months) | Total | 26,000 | Years Required to Recover Fixed Asset Investment | 0.10 (RMB26,000 / RMB256,900 |

Reference
Economics of Transition; volume 16(1) 2008, 59–84; Trade, technology, and China’s Rising Skill Demand; Bin Xu and Wei Li
Salary size set for white-collar jobs in China; 2007-11-05 08:08:58; assessed on 14 October 2014 at http://news.xinhuanet.com/english/2007-11/05/content_7012116.htm

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[ 2 ]. Trade, Technology, and China’s Wage Inequality; Bin Xu and Wei Li; p:4
[ 3 ]. Trade, technology, and China’s Rising Skill Demand (2008); Bin Xu and Wei Li; p:61